Pay, Employment, and Dynamics of Young Firms

Tania Babina, Wenting Ma, Christian Moser, Paige P. Ouimet and Rebecca Zarutskie

No 21, Opportunity and Inclusive Growth Institute Working Papers from Federal Reserve Bank of Minneapolis

Abstract: Why do young firms pay less? Using confidential microdata from the US Census Bureau, we find lower earnings among workers at young firms. However, we argue that such measurement is likely subject to worker and firm selection. Exploiting the two-sided panel nature of the data to control for relevant dimensions of worker and firm heterogeneity, we uncover a positive and significant young-firm pay premium. Furthermore, we show that worker selection at firm birth is related to future firm dynamics, including survival and growth. We tie our empirical findings to a simple model of pay, employment, and dynamics of young firms.

Keywords: Young-firm pay premium; Selection; Worker and firm heterogeneity; Firm dynamics; Startups (search for similar items in EconPapers)
JEL-codes: D22 E24 J30 J31 M13 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2019-08-05
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-hrm, nep-mac, nep-ore, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Pay, Employment, and Dynamics of Young Firms (2019)
Working Paper: Pay, Employment, and Dynamics of Young Firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmoi:0021

DOI: 10.21034/iwp.21

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